Strategic Management: Formulation and Implementation

Just-in-time Inventory Control

During the last few years, a completely new concept of inventory management, which was started in Japan, has begun to gain ground in North America. It is called the just-in-time inventory systems, or JIT. The JIT is an approach to inventory control that emphasizes having materials arrive just as they are needed in the production process.

This system is based on the idea that very little inventory is necessary if it is scheduled to arrive at precisely the right time. The JIT approach as applied to inventory allows a firm to minimize holdings costs and waiting also saves space that is usually taken up by inventory in the production area. The JIT system requires a major change in the way managers think about inventory.

Production - Operations Control

Managerial control of production-operations and financial activities is critical to organizational performance. All other organizational activities, such as engineering, personnel, marketing, and research and development, support and depend on the primary activity of producing goods and services.

Recently term "production-operations management" is increasingly dropped in favour of simply "operations management".

Operations management is the management of the productive processes that convert inputs into goods and services. The concept applies to both manufacturing and service industries, even though their characteristics differ to some degree. All organization produced outputs, where these outputs are goods, services, or ideas. Regardless of whether an organization produces a product or a service, operations managers need to be acutely concerned about productivity. Productivity is an efficiency concept that gauges the ratio of outputs relative to inputs into a productive process. Productivity is aimed at assessing the efficiency aspect of organizational performance - the ratio of outputs relative to inputs. Organizational productivity is often measured by using this equation:

Productivity= goods and services produced (outputs) /

Productivity = goods and services produced (outputs) / labor + capital + energy + technology + materials (inputs)

This approach considers all the inputs involved in producing outputs are sometimes referred to as total-factor productivity. Managers also use partial-factor productivity, an approach that considers the total output to a specific input, such as labour. For example:

Productivity = goods and services produced (output) / labour hours (labour input)

In addition, managers often develop specific ratios that gauge productivity for particular outputs and inputs.